petrobras

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Petrobras is the largest oil company in Brazil and one of the largest in the world. Its 
creation in 1953, under the government of Getúlio Vargas, marked the 50's. On 
October 3, 2013, the company turned 60.
The name of the well-known Petrobras is, in fact, Petróleo Brasileiro SA. 
Headquartered in Rio de Janeiro and currently present in several countries, it is a 
public company, whose Union - the Brazilian Federal Government plays the role of its 
largest shareholder.
Petrobras works mainly in the exploration, production and commercialization of oil, as 
well as in the distribution of derivatives, among others. Petrobras is a Brazilian mixed 
capital company operating in the energy sector, with oil exploration and production, 
refining and distribution being its main activity.
In 1938, the National Petroleum Council initiated the structuring of oil exploration in 
Brazil. In Brazil, a group of nationalists argued that the exploitation of oil was a state 
monopoly. Meanwhile, another group argued that private, national or foreign could 
exploit it.
In this context, the Petroleum Statute was drafted in 1948, the purpose of which was 
to regularise the issue of oil exploration, considering the competition in the industry.
The commission that drafted this bill did not believe in the possibility of the state being 
able to keep oil exploitation alone.
The nationalists take action by launching a popular movement that had the phrase 
"Oil is ours" as a slogan. As a result, years later, by Law no. 2004, Petrobras was 
created, whose supervision was in charge of the National Petroleum Council.
Petrobras received the right to a monopoly over all oil reserves in Brazil. This 
monopoly was only broken more than 40 years later, in the year of 1997, allowing 
large foreign companies to begin to explore oil in Brazil.
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This period of monopoly allowed Petrobras to consolidate, for many years, as the 
largest Brazilian company.
In addition, the company has always had a huge political force. Being a state part, the 
company's greatness was greatly explored over the years to represent the autonomy 
of the Brazilian people and their ability to compete with other major countries.
The announcement of the discovery of oil in the pre-salt layer occurred in 2006. At the 
time, oil reserves in Brazil were 14 billion barrels of oil. Only with the pre-salt, this 
number has risen to 33 billion, in addition to an unproven expectation in the order of 
50 to 100 billion barrels.
Despite being one of the biggest discoveries in the company's history, the pre-salt 
generated many difficulties for the years followed ( petrobras, 2016 ).
Lava-Jato 
The petrobras company is going through one of the most difficult times in its history, 
having some important names such as former Supply Director Paulo Roberto Costa, 
as well as one of the former executive Nestor Cerveró being arrested for involvement 
in corruption scandals, as well as experiencing an external crisis due to the recent fall 
of the price of oil. Petrobras has been investigated by the Federal police in Brazil and 
Petrobras is unfortunately the central protagonist of Operation Lava Jato, as a victim 
of crimes committed by its own employees in collusion with companies that supply 
goods and services. Because of the devastating effect that the investigations have on 
the investor's expectations, it is easy to attribute to Lava Jato Operation the financial 
difficulties that reduced Petrobras' market value to less than half of the company's 
book value. But, though inviting and convenient, this interpretation would be 
misleading, because it does not correspond to the reality of the facts. 
Petrobras and the 2008 Crisis 
In 2008, a global crisis triggered the collapse of the traditional American investment 
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bank Lehman Brothers, followed by the technical bankruptcy of AIG, the largest 
insurance company in the United States.
The origin of the problem occurred in 2001, with the "Internet bubble" hole. With all 
the difficulties facing this sector, the Federal Reserve of the United States began to 
guide investors to migrate to the real estate sector, adopting a policy of very low 
interest rate.
In this scenario, financiers began to seek an increasingly poor public for the real 
estate market and the government guaranteed these loans, although it was already 
known that many of these families would have difficulty paying instalments agreed 
with the creditors.
After this fragile structure was created, a process was started to create derivatives 
linked to these loans, freely traded in the financial markets, and sold to banks, 
financial institutions, insurance companies. In addition, these securities received an 
AAA rating by the major global agencies, that is, they received the note indicating the 
lowest possible risk.
In Brazil, the impacts of the crisis on the financial market were immediate, resulting in 
a sharp drop in stocks, which was driven by a strong sale of shares from foreign 
investors in order to repatriate their capital.
In addition, many exporting companies were affected by the lack of credit in the world 
market, preventing the completion of several businesses and strongly affecting their 
results.
In the context of Petrobras, one can see the short-term impact on the price of its 
shares due to the speculative movement of foreign investors.
Another point that impacted Petrobras in this crisis was the strong variation in the 
price of a barrel of oil in 2008.
In a period of only 6 months, oil prices fell from $ 145 per barrel in July 2008 to $ 35 
per barrel in December 2008. In other words, in that period alone the price was 
reduced by 76%. Thinking about the impact of this price for Petrobras, the lower the 
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price of the barrel, the lower the company's revenues. As a consequence, at 
production levels, a drop in the price of a barrel of oil may cause the company to 
reduce its quantity of oil due to declining margins or even a loss in the viability of 
exhaling some wells.
All these factors have generated a negative perception of the state, leading investors 
to sell their shares. This makes the company lose its market value, represented by the 
price of its shares times the number of existing shares.
The value of stocks, which surpassed R $ 30 in 2009, now stands at R $ 13 - one of 
the lowest levels since 2005, before the golden pre-salt period.
The market value of the company was the one with the largest absolute loss among 
Brazilian listed companies in 2013 - from US $ 124.7 billion at the end of 2012 to US 
$ 90.6 billion at the end of 2013 - according to a survey by Economática.
For Adriano Pires, an analyst at the Brazilian Infrastructure Center (CBIE), more than 
a headache for the government, Petrobras "has turned a headache for its 
shareholders" 9Petrobras 
Petrobras’ Perfil
• Investments of R$ 55.35 billion
• Sales revenue R$ 282.5 billion
• Net profit R$ -14.8 billion
• Shareholders 666.5321
• Global presence 19 countries
• Number of Employees 68,829
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• Daily production 2 million 144 thousand barrels of oil equivalent per day
• Proved Reservations 9.5 billion barrels of equivalent oil 
• Production Platforms 123 (61 Fixed, 62 Floating) 
• Refineries 13 (3 abroad )
• Production of derivatives 1 million 887 thousand barrels per day.
Petrobras annual Report